Overtime adds 50% to every hour past 40 in a workweek under the FLSA, and employer-side taxes make each overtime hour cost even more than the wage premium alone. Enter the employee's base hourly rate, regular hours, and overtime hours — the calculator shows your gross labor cost plus an adjustable payroll tax percentage. This is an estimate, not tax advice — confirm with your CPA or state agency.
The Fair Labor Standards Act requires employers to pay non-exempt employees at least 1.5 times their regular rate of pay for every hour worked beyond 40 in a single workweek. This applies to most hourly workers and many salaried employees who fall below the salary threshold for exemption.
Overtime is calculated on a workweek basis — you cannot average hours across two weeks unless you operate under an approved alternative schedule in certain industries. The regular rate includes not only the base hourly wage but also nondiscretionary bonuses, shift differentials, and certain other compensation, which can raise the effective overtime rate above what you might expect. The calculator above uses the base rate you enter, so if your employees receive additional pay components, factor those into the rate for a more accurate projection.
The 1.5x wage multiplier is just the starting point. Each overtime hour also carries employer-side payroll taxes, including your share of Social Security at 6.2% on wages up to the annual cap, Medicare at 1.45% with no cap, plus any applicable FUTA and SUTA contributions on wages still below those respective taxable bases.
Workers' compensation premiums may also rise because they are typically calculated on total payroll. The calculator lets you set an employer tax percentage to estimate this additional burden. Your actual rate depends on your SUTA assignment, workers' comp class, and whether the employee has already exceeded the Social Security wage base for the year. Review your total employer burden with the employer payroll tax calculator for a more precise figure across all tax types.
There is a crossover point where sustained overtime costs more than bringing on an additional employee. Finding that point requires comparing the overtime premium plus incremental taxes against the fixed costs of a new hire — benefits, onboarding, equipment, and added administrative load. For short-term spikes in demand, overtime is usually cheaper. For ongoing needs exceeding a few months, a new hire often wins on total cost.
The calculator helps you model the overtime side of that comparison. Pair it with the true employee cost calculator to model the new-hire side. Also consider productivity: research consistently shows that sustained overtime reduces output per hour and increases error rates, adding indirect costs that do not appear on a payroll report but affect your bottom line.
Accurate time tracking is the foundation of overtime compliance. The FLSA places the burden of record-keeping on the employer, not the employee. If records are inadequate and a dispute arises, courts generally side with the employee's estimates. Use a reliable timekeeping system and make sure employees clock in and out for every shift.
Pay attention to off-the-clock work — answering emails, setting up before a shift, or cleaning after closing can all count as compensable time. State overtime laws may impose additional requirements beyond the FLSA, such as daily overtime thresholds or double-time provisions. Enter your state's rules if they apply. This calculator gives you a cost projection based on federal rules — always confirm overtime obligations and calculations with your CPA or state labor agency before finalizing payroll.
Under the FLSA, non-exempt employees must be paid at least 1.5 times their regular rate for every hour worked beyond 40 in a workweek. Some states impose additional daily overtime or double-time requirements.
It depends on whether they are classified as exempt. Employees earning below the FLSA salary threshold and not performing exempt duties are entitled to overtime regardless of being paid a salary.
Generally no. The FLSA requires overtime to be calculated on a single workweek basis. A limited exception exists for certain healthcare employees under an 8/80 arrangement.
Yes. Overtime wages are included in the wage totals subject to FUTA and SUTA up to their respective taxable wage bases. The overtime premium itself does not change the tax rate.